chapter 12-last bit of textbook

Planning

The process of identifying and selecting an organization’s objectives and deciding how the organization will achieve those objectives

Strategy

Is the set of planned actions taken by managers to help a company meet its objectives

Mission statement

A written statement of why a company exists and what it plans to accomplish

Core competency

A special ability of a company that competitors find extremely difficult or impossible to equal

Value chain analysis

The process of dividing a company’s activities into primary and support activities and identifying those that create value for customers

Primary activities

Company activities directly related to the creation of a product, its marketing and delivery to buyers and its after-sales support and service

These include inbound and outbound logistics, production (goods and services), marketing and sales and customer service

Support activities

Company activities that contribute to the value of-creating potential of each primary activity

These include business infrastructure, human resource management, technology development, and procurement (sourcing)

Multinational (multi domestic) strategy

A strategy of adapting products and their marketing strategies in each national market to suit local preferences

Global Strategy

A strategy of offering the same products using the same marketing strategy in all national markets

Growth strategy

Designed to increase the scale or scope of a corporations operations

Retrenchment strategy

A strategy designed to reduce the scale or scope of a corporations business

Stability strategy

Designed to guard against change is used to avoid growth or retrenchment

Combination strategy

To mix growth and retrenchment and stability strategies across a corporations business units

Low cost leadership strategy

A strategy in which a company exploits economies of scale to have the lowest cost structure of any competitor in its industry

Differentiation strategy

A company designs its products to be perceived as unique by buyers throughout its industry

Focus strategy

A company focused on serving the needs of a narrowly defined market segment by being low cost leader by differentiating its product or both

Organizational structure

The way I’m which a company divides its activities among separate units and coordinates activities among them

Two important issues concern managers during market and site screening

1) keeping search costs as low as possible

2) want to examine every potential market and every possible location

Steps for Screening process

1: identify basic appeal (climate, absolute bans, access to materials, labor and finance)

2: asses the national business environment (language ,attitudes, religious beliefs, traditions, work ethic , government regulations/political stability, fiscal and monetary policies, currency issues, cost of transporting goods)

3: measure market or site potential (current sales ,income elasticity, market potential index, quality of workforce materials, infrastructure)

4: select market or site (field trips, competitor analysis)

Logistics

Refers to management of the physical flow of products from the point of origin as raw materials to end users as finished products

Income elasticity

The sensitivity of demand for a product relative to changes in income it is calculated by dividing a % change in the quantity of a product demanded by a % change in income

Secondary market research

The process of obtaining information that already exists within the company or that can be obtained from outside sources

Primary market research

The process of collecting and analyzing original data and applying the results to current research needs

Trade show

An exhibition at which members of an industry or group of industries showcase their latest products, study activities of rivals, and examine recent trends and opportunities

Focus group

an unstructured, but in-depth interview of a small group of individuals (8 to 12 people) buy a moderator

Consumer panel

Research in which people record in personal diaries information on their attitudes, behaviors, or purchasing habits

Survey

Research in which current or potential buyers answer a series of written or verbal questions

environmental scanning

An ongoing process of gathering, analyzing, and dispensing information. It entails obtaining both factual and subjective information on the business environments in which a company is operating or is considering entering.

Entry mode

The institutional arrangement by which a firm gets its products, technologies, human skills, or other resources into a market

Direct exporting

Occurs when a company sells its products directly to buyers in a target market

Agent

An individual or organization that represents one or more indirect exporters in a target market

Export management company (EMC)

A company that exports products on behalf of an indirect exporter

Export trading company (ETC)

A company that provides services to indirect exporters in addition to activities directly related to clients exporting activities

Freight forwarder

A specialist in export-related activities such as customs clearing, tariff schedules, and shipping and insurance fees

Counter trade

Selling goods or services that are paid for, in whole or in part, with other goods or services

barter

The exchange of goods or services directly for other goods or services without the use of money (oldest form of countertrade)

Counterpurchase

The sale of goods or services to a country by a company that promises to make a future purchase of a specific product from that country

Offset

An agreement that a company will offset a hard currency sale to a nation by making a hard currency purchase of an unspecified product from that nation in the future.

It differs from a counterpurchase in that this type of agreement does not specify the type of product that must be purchased ,just the amount that will be spent. This gives a business a greater freedom in fulfilling its end of a countertrade deal

Switch trading

The practice in which one company sells to another its obligation to make a purchase in a given country

Buyback

Is the export of industrial equipment in return for products produced by that equipment. This practice usually typifies long-term relationships between the companies involved

Advance payment

Export/Import financing in which an importer pays an exporter for merchandise before it is shipped

Documentary collection

Export/import financing in which a bank acts as an intermediary without accepting financial risk

Draft (bill of exchange)

A document ordering the importer to pay the exporter a specified sum of money at a specified time

Bill of lading

A contract between the exporter and shipper that specifies merchandise destination and shipping costs

Letter of Credit

Export/Import financing in which the importers bank issues a letter pledging to pay the exporter when the exporter fulfills the terms listed in the letter

Open account

Export/import financing in which an exporter ships merchandise and later bills the importers for its value

Licensing

A contractual entry mode in which one company owning intangible property (the licensor) grants another business (licensee) the right to use that property for a limited period of time

Cross licensing

Occurs when companies use licensing agreements to exchange intangible property with one another

Franchising

A contractual entry mode in which one company (the franchiser) supplies another (franchisee) with intangible property and other assistance over an extended period

Management contract

One company supplies another with managerial expertise for a specific period of time. The supplier of expertise is normally compensated with either lump-sum payment or a continuing fee based on sales volume

Turnkey (build-operate-transfer) project/investment

When one company designs, constructs and tests a production facility for a client

Wholly owned subsidiary

A facility entirely owned and controlled by a single parent company

Joint venture

A seperate company that is created and jointly owned by two or more independent entities to achieve a common business objective

Strategic alliance

A relationship whereby two or more entities cooperate (but do not form a separate company) to achieve the strategic goals of each

Brand name

Is the name of one or more items in a product line that identifies the source or character of the items

Morphemes

Semantic elements or language building blocks such as the van in advantage

Counterfeit goods

Imitation products passed off as legitimate trademarks, patents, or copyrighted works

Waterfall strategy

Sequential introduction of a product into new markets abroad one at a time

Promotion mix

Includes activities designed to reach distribution channels and target customers through communications such as personal selling, advertising, public relations, and direct marketing

Pull stradegy

A promotional strategy designed to create buyer demand that will encourage distribution channel members to stock a company’s product

Push stradegy

A promotional strategy designed to pressure distribution channel members to carry a product and promote it to final users

When is it appropriate to use push or pull strategies

• Distribution System: implementing push strategy is difficult

• Access to mass media: markets have fewer available forms or mass media to implement pull strategies

• Type of product: pull strategy is most appropriate

Marketing communication

The process of sending promotional messages about products to target markets

Communicating the benefits of a product can be more difficult in international businesses than domestic

Distribution

Planning, implementing, and controlling the physical flow of a product from its point of origin to its point of consumption

Exclusive channel

A producer grants the right to sell its product to only one or limited number of resellers

Intensive channel

one in which a producer grants the right to sell its product to many resellers

• When a producer wants its product to be made available through as many distribution outlets as possible it prefers to use an intensive channel

Value density

The value of a product relative to its weight and volume

World wide pricing

A pricing policy in which a product has the same price in all international markets

Dual pricing

A pricing policy in which a product has different price in export markets than it has in the home market

Transfer price

The price charged for a good or service transferred among a company’s headquarters and its subsidiaries

Arms length price

International transfers between subsidiaries that now trend to occur—-the free market price that unrelated parties charge one another for a specific product

Price controls

Upper or lower limits placed on the prices of products sold within a country

Capacity planning

Assessing a company’s ability to produce enough output to satisfy market demand

Facilities location planning

Selecting the location for production facilities

Location economies

Economic benefits derived from locating production activities in optimal locations

Process planning

Deciding on the process that a company’s ability will use to create its product

Facilities layout planning

Deciding the spatial arrangement of production processes within production facilities

Make-or-buy decision

Deciding whether to make a component or to buy it from another company

Outsourcing

Buying from another company a good or service that is part of a company’s value -added activities

Fixed assets

Physical items that a company’s ability plans to use over the long term to help generate income

Total Quality Management (TQM)

A company-wide commitment to meet or exceed customer expectations through continuous quality improvement efforts and processes

ISO 9000

A series of Individual standards that a company is certified as achieving when it meets the highest quality standards in its industry

Just-in-time manufacturing (JIT)

When inventory is kept to a minimum and inputs arrive to the production processes exactly when they are needed or (just in time)

Back to back loan

A loan which a parent company deposits money with a host country bank, which then lends the money to a subsidiary located in the host country

American Depository Receipts (ADRs)

Certificates that trade in the United States and that represent a specific number of shares in a non-US company

Venture capital

Financing from investors who take part ownership in a business that is expected to experience rapid growth

Capital structure

The mix of equity, debt, and internally generated funds used to finance a company’s activities